GECON200-Topic #3: Japan and GDP After the Earthquake, Tsunami, Nuclear crisis

While the tragedy in Japan has yet to completely unfold, many economists are already thinking about what Japan and other manufacturing economies like China, South Korea, and Taiwan should be doing in the near future. Several manufacturers have already had to alter their production plans due to the disaster, but the long-term impact is unclear. Many manufacturers can shift production to other countries in the long run helping to avert shortages. At the same time, Japan has been struggling to begin its own economic recovery from the financial crisis of 2007-2009. The crisis itself threatens to derail the recovery in Japan with a lower energy supply, manufacturing moving offshore, and domestic (Japanese) manufacturers shutting down production. On the flipside, rebuilding will likely lead to a boost in GDP since new production counts as current GDP.  The impact of the Japanese crisis will be felt in the US, as upstream supply gets cut off, production of many manufactured and consumed goods here will need to be curtailed. A couple of NPR podcasts by Tell Me More, and On Point discuss the economic issues in more detail and get some in depth conversation with callers and economists.

Questions you might want to answer (There is no need to answer all of these, in fact I dislike it when you try to answer all the questions.)

  • Do you believe Japan will quickly recover, or take a long time to recover from this crisis? What long run impacts do you foresee?
  • How will the triple crisis in Japan impact the U.S. and our fledgling recovery?
  • What future do you see for nuclear power in solving global energy demands? As this crisis unfolds, is nuclear energy becoming less important moving forward?
  • Compare the triple-crisis of the last two weeks with the Kobe earthquake of 1995. How did Japan respond?

39 thoughts on “GECON200-Topic #3: Japan and GDP After the Earthquake, Tsunami, Nuclear crisis”

  1. After the turmoil left from the earthquake in Japan, many countries have been undermining the power of Japanese production. For many years now, Japan’s economy has been improving as a result of all the exports in things such as automobiles and electronics but as a result of the huge damage done by the quake, countries are looking to spread their manufacturing stations throughout many other countries (according to Japan’s economy will however recuperate from this disaster because the epicenter of the earthquake was in the northeastern part of Japan (Honshu) ( which didn’t contain most of the nation’s industries. Thus, there is still a lot of potential for Japan’s economy to be prosperous. The only factor that may harm the economy is the amount of damage the country will have to pay to repair in the northern part of Japan, as well as the death toll. Another damage the economy of Japan has to face is the fact that businesses in China and other countries have begun looking for other countries to ship their exports to, instead of Japan. These are also some of the long run effects of the earthquake. These exports amount to $100 billion. Also, companies that rely on the high end Japanese electronics and auto parts have to face high prices and shortages as well. With all of this disaster, there is still hope for Japan’s economy because many of the damages done to Japan’s economy are short term. Analysts believe that Japan will return to being prosperous in the second half of this year. ( In conclusion, I believe that this earthquake may have damaged the economy of Japan somewhat, but with all of the industrial products Japan has to offer, the economy is going to be prosperous in the long run.

  2. In my opinion it is going to take years for Japan to recover from this disaster. The earthquake alone was the 5th largest earthquake recorded since 1900 and the worst earthquake Japan has ever suffered (CBN news). 3 days after the earthquake hit and the country is still in huge disarray. One of the main reasons I feel Japan is in trouble is because their governing system is not that strong. In a comparison of industrialized countries, Japan ranks in the lower half in governance despite having the 3rd largest economy in the world (Brookings). Having strong governance is extremely important in the steps to recovery as a lot of the country is relying on the government’s plan of action to help them out of this disaster. In fact, over the past decade Japan’s leadership has seen 4 prime ministers come and go in 4 years. Japan as flourished under a system in which they leave most of their domestic leadership decisions in the hands of bureaucrats who have seen their power diminish (Outside the Beltway). So in summary, not only does Japan need to deal with the effects of this huge disaster, they also need to revamp their government system as it is beginning to fail. Japan as a lot on their plate in the upcoming years and I feel it will take a lot longer for them to recover then it would if this disaster had occurred somewhere else, not to mention the fact that a lot of the world relies on Japan for exports and such.

  3. I think Japan will take a long time to recover from this crisis. Although most of the earthquake’s damage was not done to the manufacturing heartland of the country that is not to say Japan is out of the hole just yet. Ripple effects from the impact of the earthquake such as closed harbors and power outages are just as threatening to Japan’s economic recovery (The New York Times). We have already seen what the explosion of the nuclear reactors has done to the country; it has contributed to the energy loss and has contaminated part of the food and water supply (Los Angeles Times). On top of these important problems, “The Japanese government is going to have to fund a massive rebuilding program, but with a national debt that is already swollen to roughly 200% of GDP” (
    One of the long-running impacts that I see is the decreased demand for Japan’s products, which will affect Japan’s economy in the long run. “Japan’s importance in the semiconductor industry as a whole has receded in recent years, as more production has shifted to South Korea, Taiwan and even China” (The New York Times). In the face of a catastrophe, businesses in mainland China “have already started looking for replacement markets for the some $100 billion of exports they ship to Japan annually” ( If Japan is not as needed in the future, won’t this, to some degree, hurt their economy?

  4. According to Huffington Post, the area of Japan most heavily affected by the recent devastation accounted for approximately 4% of their total GDP. This number is around the same level of damage done to the city of Kobe when it was ravaged by an earthquake in 1995. Many economists are remaining optimistic about the overall effect of Japan’s triple threat, as the damage done by the earthquake is comparable to Kobe’s estimated bill of $100 billion ( ; Japan’s total damage will likely be anywhere from $60 billion to $120 billion ( Kobe suffered temporary yet localized devastation, and recovered remarkably quickly, according to Richard Jerram, a leading expert at Macquarie Research concerning Asian economics. Further optimism was provided by a World Bank report: “If history is any guide, real GDP growth will be negatively affected through mid-2011. Growth should pick up in subsequent quarters as reconstruction efforts, which could last five years, accelerate.” Despite the confidence of economists in the buoyancy of the world economy, concerns remain for the Japanese economy. A recent estimate from Goldman Sachs cited a daily cost of $150 million to Japanese automakers due to widespread shutdowns ( Toyota, for example, has lost approximately 45% of its global production capabilities. These losses translate into gains for rival auto producers such as Korea’s Hyundai, who will benefit from customers turning their attention to more able-bodied companies. This is a significant portion of the consumer population; according to one estimate, 14% of the 72 million vehicles produced globally last year were made in Japan. While this appears to affect Japan alone, such an assumption is false. Companies within the United States are already beginning to feel the effects of a loss of specialized parts produced mainly or solely in Japan. According to Tony Fadell, a former senior Apple executive, “there are all kinds of specialized little parts without second sources, like connectors, speakers, microphones, batteries, and sensors… Many are from Japan. Lacking some part, even if it costs just dimes or a few dollars, can mean shutting down a factory” ( Additionally, General Motors has announced recently that it will be forced to freeze production in its pickup plant in Shreveport, Louisiana, as a direct result of the Japan crisis. While these global threats may merely be temporary, Japan certainly faces a difficult road to recovery. The full extent of damage can, as of now, merely be speculated.

  5. In my opinion I feel that the economy in Japan will take a while to recover due to this horrible disaster. The economy in the short run will be affected immensely because so many companies and plants are down due to the earthquake and Tsunami. Since they do have many energy plants open as of now, many companies are having a hard time trying to get back to work and continue production. Right now Japan is going to face a lot of loss because production is down such as their car dealerships. Toyota, the largest automaker in Japan, shut two plants down due to possible fatalities or injuries of the workers. Before the disaster, Japan had already been struggling for prior decades and their debt is the highest in the industrialized world. Since Japan is the third largest economy in the world, the U.S. is going to receive fewer imports for months. An upcoming advantage that might help the economy of Japan in the short run is tourism season which is in April and May. By the tourism season approaching Japan can hope that people will still travel which will help Japan in receiving money for travel and tourism. This statement said by money news “if people don’t travel then they will be hit twice” which means that on top of this disaster, now they won’t receive the profit from tourism. As for the long run, according to, the recovery might be helpful for the economy. Since many of the buildings were destroyed, the reconstruction will contribute to work for people. Also the production in the long run will contribute to the GDP for that year and will help the economy and raise GDP. After reading an article by CNBC, economists predicted that before the 9.0 earthquake hit, they predicted Japan to exit their “lull” between April and June and now since this earthquake struck it is now on track for July to September or even as long as December. For these economists they feel that these predictions might be a little pessimistic but now all Japan and the U.S. can do is to be optimistic and make sure everyone is doing all they can to get Japan back on their feet.

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  6. The crisis in Japan concerning their nuclear power plant, which was damaged by the earthquake and tsunami, has raised questions about the movement towards nuclear energy solving the global energy demands. The power plant located in Tomioka, Fukushima, which was one of the hardest hit cities by the tsunami, suffered much destruction to the facilities and severe damages to the nuclear reactors. These damages have resulted in the release of small amounts of radiation into the air with the threat of larger amounts looming.

    This nuclear crisis has caused people to develop negative attitudes towards the movement regarding nuclear energy in other countries, especially the United States. In 2008 President Obama said, “It is unlikely that we can meet our aggressive climate goals if we eliminate nuclear power as an option.” Even after this crisis Obama fully stands behind his movement towards nuclear energy. It would reduce dependence on foreign oil which would create a positive impact on the economy. As the radiation threat continues to grow, so do the amount of anti-nuclear supporters. California has become increasing fearful of the radiation traveling from Japan to the U.S.

    The fear of radiation is causing people to dismiss it as a plausible solution to energy development, even though the top health professionals and experts are continuing to calm the public that the small amounts of radiation are no threat to health. There have been recent reports that some radiation levels were found in some food recently in Japan, which seems alarming, but really it should not be a concern. According to a CNN health correspondent, “If you were to eat this amount of radiation every day for one year, you would only be exposed to the same amounts as if you had got a CAT scan.” Although it may not be significantly harmful to health, it could have an impact on the amount of exports Japan is able to trade. After the horrific crisis it is important that Japan rebuild, and trading would help them create more wealth to fund their relief efforts. Although the nuclear energy crisis seems not to be harmful at this point, skeptics seem to be emerging during Japan’s crisis and see it as less important to move forward with nuclear developmental plans all over the world.

  7. It is my belief that it will most likely be awhile till Japan is able to fully recover from this tragic crisis. In recent history, Japan has shown that it has a particularly advanced economy and because of this fact, I believe that even though their economy is in bad shape right now; when the country is finally able to recover, there should be few, if any long-term impacts on the economy. According to David Kesternbaum, the region most affected in Japan only accounts for approximately 4 percent of the country’s entire GDP and not even the whole of the region was significantly affected. ( As much as people in the United State may be emotionally affected by this catastrophe it will most likely not have too much effect on the U.S. economy, except for some possible short-term disruption which will hopefully fix themselves in a relatively short period of time. On another note, if we look at and compare this current crisis with the Kobe earthquake of 1995 we can see that there are significant similarities and differences in the way that the Japanese reacted. For one, most analysts thought that it was going to take at least ten years for Kobe to return back to normal, but astonishingly it was only two years later when all the infrastructure had been restored with greater insulation and all the debris had been cleared. However, this most recent earthquake was unfortunately, more than 170 times larger than the ’95 Kobe earthquake and as we all know was followed by a especially destructive tsunami. ( Mike Flanagan, chief executive of industry consultancy Clothesource, says that the full implications of the situation continue to be unclear, “above all because we’ve still no idea what the energy position will be like for the next month or so…and one power meltdown might change everything.” (

  8. After the recent disaster in Japan, I believe there will be a long recovery period. As stated above, some of Japan’s industrial areas were not affected, but I believe the huge problem will be that of the nuclear crisis. On Point states that the country will more than likely have a hard time recovering because people are not going to want to produce or buy products from a country that has known toxic chemicals in the air. It will cost major amounts of money to rebuild the country, and with having to spend on that, and the lack of income from a huge decline in production, it could take in my opinion close to a decade to recover. All of this occurring when Japan has not even recovered from its financial meltdown a few years back, is a huge problem. The country has too much to rebuild and establish for it to happen anytime soon. This is a devastating time that I believe will have a lasting impact for quite some time.

  9. The Tsunami that hit Japan had the potential to seriously disrupt the already weak revival of the global economy. The disaster hit the northeast region of Japan which is not as large of a manufacturing hub as the western region where Tokyo, Japan’s economic center, is located. Most likely this means that even though their economy will suffer large hits, it will not be as drastic as it could’ve been. Experts say that the only system that could damage Japan’s economy drastically is the electrical grid, in which 7% of the nation’s generating capacity has already been lost. This could eventually harm the economy with businesses not having any power to operate according to Companies such as game publisher Square Enix Holdings Co. said it was shutting down its game servers for at least a week because of power supply concerns (Chicago Tribune). In an effort to revitalize the economy the Bank of Japan has pumped three trillion yen into the economy in order to re assure financial markets ( Japan has one of the largest debts in the world and the disaster has worried the Japanese government that it will not be able to borrow money to rebuild the nation. Luckily most of the debt is held by Japanese, and not foreign investors. Economist Marcus Noland says that the common Japanese man would not dump government bonds if the Government says that it is going to use that money to rebuild Northeastern Japan. However if these investors focus on their own country’s needs, they will be less likely to finance U.S. debt (

    Other than the investing problem, experts believe the U.S. economy will prosper more than fall because of demand of American products increasing because of the decrease in supply of some Japanese products such as the Toyota Prius and electronic systems. There will also be jobs in rebuilding the damaged areas in Japan for construction companies which could most likely be aided by construction equipment maker Caterpillar Inc. A long term result however could be higher oil prices because of the lessening support behind nuclear power because of the events in Japan caused by the earthquake (Chicago Tribune).

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  10. Being the world’s third largest economy I think it will take Japan years to recover from this crisis. The World Bank estimated that it will take at least five years for the country to recover from this disaster and it could cost up to $235 Billion (Wash. Post). At this point it is hard to tell what the extent of this damage is since their main priority at this point is human safety. We do know however that many of their major ports were destroyed. Meaning many exports waiting to be shipped were either damaged or destroyed. This includes many exports the U.S. receives including models of Toyotas and Hondas, which are exclusively made in Japan. It is also going to take some time to repair these ports meaning many countries will have to look elsewhere to get what they need. This could have a long term effect on Japan where they might not get those trading partners back. Another problem is the radiation affecting their food supply by contaminating their crops. This is rather concerning to farmers since there is no telling how long their land will be contaminated. Some goods have already been taken off the shelves such as milk and spinach due to the levels of radiation. Right now it is hard to tell the extent of the damage but I predict it will take years for them to recover especially since they are still dealing with explosions within nuclear plants.

  11. Due to the natural disasters and resulting nuclear destruction, I believe it will take decades for Japan to completely recover and begin to economically grow once again. Japan will most likely be feeling the effects of the disaster for years to come because of the extreme damage it has done, particularly to nuclear power plants, and the need for rescue a recovery efforts. With much of the Japanese governments attention turned towards recovery, the economy and business will most likely be pushed aside for the time being.

    While there are conflicting reports about the damage and extent of danger caused by the nuclear plants ( (, the fact of the matter is that the nuclear damage poses a huge problem ( This raises the question of whether world governments need to begin to move away from the us of nuclear power. Personally, I agree with German Chancellor, Angela Merkel, when she states, that in light of what is happening in Japan, the world needs “to reach the age of renewable energy as soon as possible”. she also expresses her concern that any country could experience such a nuclear disaster when she displays how in Japan “the apparently impossible becomes possible”.

    As Troy stated above, Obama and his administration believe that nuclear power can be the solution to the world’s renewable energy crisis. But in light of the nuclear disaster in Japan, can nuclear power really be trusted? And is it worth the risk? In my opinion, it is not. Hopefully, what transpired in Japan will change the perception of the nuclear industry and countries such as Indonesia and Malaysia will reconsider their nuclear growth (

  12. According to, “Citi Investment Research analysts estimate that the total damage to structures will fall in a range of roughly $60 billion to $120 billion, roughly comparable to the Kobe earthquake in 1995” ( This being said, considering that Japan was in a recession like ours, I think like most other people here that it will take Japan a while to get themselves collected and start rebuilding. Especially with the country now dealing with their nuclear problems, like Troy has said, “This nuclear crisis has caused people to develop negative attitudes towards the movement regarding nuclear energy in other countries, especially the United States.” The fear of radiation poisoning is deterring the United States from building more nuclear reactors seeing what the giant tsunami has done to Japan and its nuclear reactors. Dealing with the Japanese market currently, however, BBC business reporter Mark Gregory said: “You would expect the currency of a country in crisis to fall in value. But the opposite has happened in Japan. During trading on Wednesday, a dollar was briefly worth less than 80 yen for the first time in 16 years.” This maybe a surprise, but this is bad news for Japanese exporters because a high valued yen means their goods become less competitive in foreign markets. This similar rise of the yen occurred during the Kobe earthquake in 1995 as well. Let’s hope that another earthquake of this magnitude doesn’t occur in Japan in the next couple of months or even years setting them back even further in recovery.

  13. The road to Japan’s economy getting back on its feet isn’t a long one. The first priority is to invest money into making sure all of their people are safe, then get back to what they do best; exporting. People here need to realize that Japan is one of the biggest economies and has some of the greatest numbers of exports in the world. The disaster in Haiti was different. That was a country with a poor economy and poor living standards. The death toll in Haiti is estimated to be over 200,000 and people there still live in tents. For Japan, most will see relief within weeks, and a death toll is around 1,600 ( Although this blog isn’t about a death toll, it puts into perspective how much of a blow Japan comparatively took. One thing is that Japan has a balance budget. Unlike the U.S. they spend only about 6.4% on their military ( and in 2010 alone their net exports increased by a whopping 25% ( This is a sign of an increasing GDP made up of their government spending, consumption, and net exports. My advice would be, after everyone is safe, open back up ports and get back to exporting. In conclusion this will be a great way to put more money in their pockets, and figure out what they want to do with the whole energy crises, which in my opinion I think nuclear power should be used, but only in countries that have low chances of being hit by natural disasters like earthquakes and tsunamis. Anyways, in a little side note, I was watching the news the other day and they were talking about how Hybrid car sales have steeply increased in the U.S. Once they get back on their feet, Japan should export more Hybrids because I see a direct correlation of those sales increasing as gas prices only get higher.

  14. Is there really going to be an economic crisis in Japan? I believe the word crisis is pushing it a bit. Situation is a better word that doesn’t stir too much panic. Let’s take a look at the recent Gross Domestic Product of Japan in the past couple of years. As of 2009, Japan’s GDP was just over 5 trillion dollars (World Bank). In the last quarter of 2010 it fell 1.3% but was projected to rise back up 0.5% in the first quarter of 2011 ( One of the hardest hit companies was Toyota whose stock fell 9%. As if the stock drop wasn’t enough, Toyota is now forced to close twelve of its factories; that is 38 percent of ALL the Toyota factories ( With more drops in the market on top of that, the Gross Domestic Product of Japan is sure to fall more on top of that 1.3% from the last quarter. Does that mean it will take forever for Japan to recover? Japan has such an advanced economy and improving technology, I believe there will be a speedy recovery.

  15. Alexa brings up a good point with tourism in Japan. Since “tourism season” comprises of the months of April and May, which are right around the corner, it doesn’t look likely that many people will choose to vacation in Japan with all that has recently happened. Especially since, “More than 250 aftershocks larger than magnitude 5.0 were recorded in the region in the seven days after the March 11 temblor, including three above magnitude 7.0. . . many worry that another ‘big one’ is coming.” Many Japanese have also opted for the bicycle as their main way of transportation and remain fearful of taking the subway, which stalled on March 11. “Some are carrying helmets to protect against falling objects.” To me, this does not seem like the picture of a relaxing vacation that many tourists have in mind. Japan still has a long way to go.

  16. According to Joachim Fels, Spyros Andreopoulos, and Morgan Stanley in an article of the Wall Street Journal, “Economists React: Japan’s Unique, Uncertain Challenges,” Japan’s triple crisis, concerning the earthquake, tsunami, and nuclear plant disasters, will not prove to have an impact on the United States in a manner of which it cannot handle. The article states four concerns that Japan’s crisis has upon the rest of the world: the “trades of goods and services, capital flows, financial market contagion, and commodity prices.” Although the lack of trade with Japan for the United States will have its setbacks, the United States has enough provisions to be able to sustain itself if the crisis in Japan proves to be more severe than expected. Not to mention other marketing opportunities with other countries. The United States could choose to take a bargaining approach now, offering aid to Japan in exchange for special discounts when Japan gets back into business. Or the United States could negotiate business with other countries for beneficial trade in exchange for the United States’ loyalty.

  17. In the time following Japan’s largest reported earthquake and tsunami ever recorded, much has happened in regard to their economy. Post-disaster, senior economist, Yasuo Yamamoto who works at Mizuho Research Institute in Tokyo has said, “The government would have to sell more bonds, but this is an emergency so this cant be avoided.”’s-economy-post-quake.html Yamamoto has also said that it will be more difficult to lower the interest rates given their current state. One of Japans major exporters, Sony, has already had to shut down six factories. Analysts at Nomura only feel that the economy will be at a loss during the next two quarters in this year but are hopeful that it will rebound and growth will start in the third quarter. Many economists were expecting Japan to get out of their lasted crisis in 2007-09 in the second quarter of 2011 but with this disaster of course the growth will now take longer. As said in an earlier post this disaster can be seen to be a close resemblance of the Kobe quake in ’95 with Kobe’s GDP hit by 12%, yet Japan was only hurt by 7% yet the nuclear problems are now a large problem to look into as it could push damages from 14.6bn to 34.6bn. After the tsunami destroyed some manufacturing plants, Toyota, which was hurt, has already quickly moved much production overseas. Companies just as Sony, Toyota and Canon have slowly been moving production from Japan to China and Vietnam in order to lower-cost production platform. Now that this disaster has occurred it is expected that the pace of the companies moving overseas will increase.

  18. I think that Japan is recovering better after this earthquake than they did in 1995 after Kobe. This earthquake was stronger, registering near a 9.0 magnitude while Kobe was a 6.9, but yet Japan is already making steps towards recovery. For example, today the main expressway between Tokyo and the cities hit the worst reopened for dirvers only thirteen days after the earthquake. There were less deaths in Kobe (only about 5,500) while the death toll after this disaster is already above 10,000 (Yahoo News) with thousands still missing. I also think they seem to be recovering better this time because they were quick to start searches for people, are allowing volunteers from other countries, and there seems to be a lot of repsonse from other countries to provide foreign aid. After Kobe, Japan was not open for foreign aid, but this time everyone around the world is getting involved, including big names like the American Red Cross and Mercy Corps. The big issue now is what is going to happen with the power plan in Fukushima. According to, the costs are estimated to be around $309 billion for all the devastation caused and this doesn’t even include all the damage from the nuclear crisis. This will be a slow recovery, but the efforts to reconstruct the towns and the people seem to be quick and determined.

  19. When speaking of disasters in Japan, my mind slips to thinking of the two atomic bombs dropped on Hiroshima and Nagasaki at the end of World War II. The catastrophic effect of these bombs destroyed both cities and much property in similar way that the tsunami did. Buildings, factories and homes were all destroyed. As a result the economy lost jobs and capital.

    To help rebuild, the Americans occupied Japan. This led to a quick modernization and westernization of the country, far quicker than other countries like Germany. With America help rebuilding the country, Japan’s economy boomed well into the 1990’s. This boom can directly be related to the westernization due to America’s assistance.

    With global aid, Japan could recover with relative ease. On a personal level, many Japanese have lost most of what they had worked for in their lives; homes and possesions. On a national level, as said previously, the GDP will increase and Japan can modernize to an even greater level.

    While I do not wish for anything of this magnitude to happen in the States, America’s infrastructure is very outdated. While we helped rebuild Japan and they continue to benefit from doing so, America has let our bridges, factories, and transportation systems get outdated and run down. A disaster such as Japan has faced FORCES there to be new construction. America will not do so because of the cost.

  20. In terms of the earthquake in Japan and it’s impact on the U.S., The Chicago Tribune believes the U.S. could see a job boost while various consumer goods are limited. “In fact, there is some thought that the catastrophe could mean more jobs within the United States, as companies pick up production slack or are called upon to help rebuild that country.” While the disaster in Japan is nothing less than devastating, glimpses of hope and optimism are always positive.

    The Fukushima Dai-Ichi nuclear plant damaged during the earthquake plays a big role in the tripple-crisis of Japan. While this has been the worst nuclear disaster since Chernobyl in 1986, Bloomberg Businessweek released yesterday that, “The nuclear issue has calmed,” and that “The feared nuclear meltdown in Japan hasn’t happened and looks less and less like it will.” Yet another sign of optimism that must provide a sense of security for the people of Japan.

    Many have been wondering what the results of this earthquake mean for GDP and according to economists Chiwoong Lee and Naohiko Baba, “No direct impact will be seen in GDP data.” They believe that the damages from the earthquake will instead impact capital due to the recovery of buildings, homes, and factories.

    Japan’s economy is not at a loss if compared with other disasters such as the earthquake in Haiti in 2010. Japan’s economy is third in the nation and while the road to recovery ahead may not be pretty and will take time, what came out of March 11 could have been much worse for Japan.

  21. I agree with the majority of the comments already posted. However I feel as though everyone has focused on the question of the impact on Japan rather than that of the U.S.. Along with an increase of GDP, I think the other sure thing to come of this disaster is lower prices of oil. Japan (prior to this incident) was the world’s third largest consumer of oil and as we all know, when demand decreases and supply is unaffected, we will see a subsequent fall in price. Granted there is still problems in the middle east that must be taken into account, I still believe the gas prices will fall, though obviously not as much as it could if all was peaceful in the middle east.

  22. I think and so does economists that Japan’s situation will take quite some time to recover. According to Yukiya Amano, the director general of the International Atomic Energy reviewed in the NYTimes, ( a great deal of effort should be applied in order for Japan to move past its “coincidental” accident, more effort than a two week plan for the production process. Since future upholding for Japan is unclear, and manufacturing dealing with Japan is on a downhill, the best way for it to actually recover is to move forward and rebuild since it would boost the GDP as a whole since the new production would still be counted. As Shannon also mentioned, the ripple effect that is caused due to the earthquake threatens Japan drastically and that is why it needs to move forward and it would be doable as long as it does move past it. Since everything that happens globally has a ripple effect, US is affected somewhat by what is happening to Japan as far as the economy goes. In my view, the nuclear issue might have exploded and destroyed a great deal but not because of the nuclear energy itself.

  23. After the three crises in Japan, it will most likely take a long time to fully recover. Since approximately 2 out of every 5 companies in the nation do not have electricity, it will obviously be difficult to produce goods and services to stabilize the nation as a whole. Seeing as companies are unable to acquire money from their products, they are also unable to pay their dues on loans to Japanese banks (1). Furthermore, the Japanese “stock market took its worst dive since the fall of 2008” since manufacturers are unable to export any goods due to destroyed ports (2). In addition, other countries in Asia are suffering from this disaster because they are seen as “dependent” to Japan. For example, South Korea and Taiwan are both unable to receive necessary parts for its electronics manufacturers. Not only are nearby countries suffering due to Japanese products, but countries are also unable to export their products to Japan. For instance, Chinese businesses have expressed their dependency on Japan because they are looking for “replacement markets for the some $100 billion of exports they ship to Japan annually” (3). Since these crises have affected multiple countries both directly and indirectly, I am personally predicting that it takes Japan a long time to recover completely. Since unproductive companies are sending the banking system into a downward spiral and the fact that Japanese ports are destroyed resulting in lack of trade, the country is definitely going to need time to recover completely.


  24. I believe that Japan will recover quickly from this earthquake than the Kobe earthquake of 1995. The effects of the most recient earthquake were indeed devistating but an economic turn around will be quicker than the Kobe earthquake for a couple reasons. The northern eastern coastal part of Japan that felt the most devistating effects from the quake were fortunately less developed and prosperous in economic growth than the city of Kobe. The Kobe earthquake decreased production in Japan by 2.6% during the month of the earthquake but had a quick rebound with a positive 2.2%. 16 years later technology has improved with will aid in a quicker recovery from the most recient earthquake. Also, Japan’s central bank also stated that they will do what ever it takes to keep the financial market stable even if they have to put money into the finacial system. Japan is also nearing their peak tourism season. The tourism will definitely decrease but any cash flow into the economy of Japan will be benifical for the growth and recovery from the earthquake.

  25. Geographically, the Kobe earthquake had more of an impact on the nation’s gross domestic product product than the recent earthquake in Japan. According to an article from the Vancouver Sun,( the areas that the Kobe earthquake hit affected about 12.4% of the nation’s GDP compared to 6-8% to the areas from the recent earthquake. Nonetheless, Japan responded to the Kobe earthquake with great planning and funding on reconstruction. ( The central government issued a two month halt on rebuilding so they could allow local governments to plan out first. By 1999, through all the funding and rebuilding, the Kobe economy had recovered 75% to 90%.

    At this point in the recent triple crisis, it’s too early to tell how Japan will plan and respond in rebuilding the affected areas. Politically, you can compare how the prime minister’s differed in the 1995 earthquake and the recent disaster in responding immediately for the people in need. ( Today’s Japan Prime Minister Naoto Kan responded by dispatching help from the country’s Self Defense forces. As compared to Tomiichi Murayama who in 1995 delayed four days before outside emergency rescue forces were able to come aid.

    I believe Japan can recover from this disaster greatly and restore the sectors that have been lost. The Kobe earthquake provided experience and more than likely will help the future on planning and rebuilding.

  26. It’s too soon to tell whether or not Japan will be able to recover quickly from their current situation. Since the situation has yet to come to a standstill, and the nuclear reactors are still on the fritz, there is still a multitude of ways that the scenario in Japan could unfold. In the long-term, I feel that Japan will eventually be able to get back to the way things were, till then however the rest of the world will no doubt feel the repercussions from such a devastating event. One road that Japan could take to help their situation is to build factories or other assets over seas in order to increase their production. However, they would no doubt suffer a loss to their GDP due to the fact that these assets would most likely be in other countries, not affecting the gross domestic product of Japan. The crisis in Japan clearly devastated the lives of many people, along hurting the economies of many countries in the world, but soon enough, the people of Japan will be able to overcome their challenges.

  27. Northeast Japan accounts for 4% of Japans GDP, comparable to Kobe’s GDP, an earthquake which experts assert did not “significantly harm larger economic trends” (Huffpost). So while the earthquake did account for hundreds of billions of dollars in damage, much of Japan’s manufacturing centers were avoided and history demonstrates that such a catastrophe will not necessarily result in economic collapse, especially for an economy as strong as Japan’s. However, though the initial structural damages may readily recover, the overarching question is what impact will this disaster have in the long run. Japan already holds the largest national debt of any nation, and with increase in bond sales in line with the fall in stocks, many fear that investors will lose confidence in Japan as a result of this growing debt which could stagnate future economy (businessweek) Thus, Japan’s biggest problem seems to be their massive pre-existing debt, which is only exacerbated by the recent disaster. While the direct monetary damages incurred by the tsunami may realistically be very surmountable, the disaster accentuates an already imposing debt, and casts greater uncertainty in future investment and thus Japan’s future economic growth.

  28. The nuclear crisis in Japan has revived fears about nuclear power plants and radiation poisoning. The Japan crisis will be categorized with Chernobyl and other nuclear disasters for future discussions about nuclear safety. But that is what will be discussed when nuclear energy is brought up: Safety. The lasting impact of this nuclear crisis will not be the closing of nuclear power plants worldwide, or even a ban on future nuclear plants. Instead, it will fuel further research into how to design safe nuclear power plants. But why won’t countries begin shutting down nuclear power plants, even after Japan’s reactors release waves of radioactive iodine? Because they need nuclear power plants as a source of energy that doesn’t contribute to global warming.
    The world’s energy consumption will continue to increase annually, and that will continue with unstoppable momentum. By no means is the world going to refrain from effective energy sources, especially in fast-growing economies such as India and China. In order to keep up with energy demands and the desire for clean energy, nuclear power will have to play a part in the future of our energy.
    In a article by Peter Shadbolt, he says the 6 nuclear power plants create over 4,500 megawatts of power. In comparison, Japan’s 23 wind turbines, which make up a wind farm, create only 46 megawatts of power. So, nuclear power will live on, because of its enormous potential to create energy. However, with great reward comes great risk. In the case of nuclear energy, we risk another Chernobyl or Japan nuclear crisis. In my opinion, in light of the Japan crisis, more effort and planning needs to be put into future nuclear power plants. Perhaps Japan needs to design tsunami proof reactors; or simply build reactors in lower risk areas. But the world needs to think of something, because nuclear energy will be around for a long time.

  29. In spite of the tragic earthquake and subsequent events, there still is hope for “quick” economic turnaround in the distressed country of Japan. Most of this dwindling hope rests on the outcome of the Fukushima Daiichi power plant. As of March 27, 2011, Bloomberg Businessweek reported, “The highest radiation readings so far suggest the situation has yet to be contained more than two weeks after an earthquake and tsunami knocked out power to the plant.” If, and only if the Japanese are able to contain the nuclear power plant, I believe Japan has the political stability and economic capability to have a sudden turnaround in a short period of time. Historically, Japan has endured similar natural disasters such as the Kobe earthquake in 1995 and following only three months Japan was back at full production. Certainly, the Kobe earthquake was not on the same level of the 2011 earthquake, but I believe history shows that the Japanese will once again be resilient in the face of devastation.

    Dampier, Mark. “Japan’s economic recovery will be swift.” The Independent. 26 March 2011. Web. 27 Mar 2011. .

    Nakayama, Michio, and Tsuyoshi Inajima. “Radiation Danger Stalls Efforts to Repair Damaged Japan Reactors.” Bloomberg Businessweek. 27 March 2011. Web. 27 Mar 2011. .

  30. One thing is for sure: Japan’s economy is not going to benefit from this earthquake. The question that must be asked is how much of a difference is it going to make? I agree when people say that there will be a brief benefit in the market as the third-largest oil consumer will temporarily leave the market. However, given the crisis in the Middle East, I do not believe that there will be a tremendous amount of fluctuation with the oil prices because these two events basically offset one another. According to WKTV in New York, there will be short-term benefits for American car companies, as someone pointed out earlier, Toyota will inevitably take a hit because of the earthquake.
    However, what I want to talk about is nuclear power. I went fishing and found an article dated April 27, 1987 in the New York Times about how Europe reacted after the Chernobyl disaster. As that article said and as time has also told us, nuclear power has become more abundant after that incident. However, there have been calls in the past few years that nuclear energy isn’t the most environmentally-friendly power source. It also is not the safest. Is what’s happening with Japan’s nuclear plants going to mark the beginning of the end for nuclear power? What other major power source will rise up and take its place if it does? How would the world change in response? Only time will tell. I just wanted to throw these questions into the mix since I hadn’t really noticed anyone talking about the nuclear disaster.
    Other than that, I feel that this crisis will take several years to recover from. Tourism will also take a hit. It also did not help that Japan was already doing poorly in economic terms. We will see how long it take for Japan to get back to where it was a few years ago, but in my opinion, it’s going to take a while.
    However, what I want to talk about is nuclear power. I went fishing and found an article dated April 27, 1987 in the New York Times about how Europe reacted after the Chernobyl disaster. As that article said and as time has also told us, nuclear power has become more abundant after that incident. However, there have been calls in the past few years that nuclear energy isn’t the most environmentally-friendly power source. It also is not the safest. Is what’s happening with Japan’s nuclear plants going to mark the beginning of the end for nuclear power? What other major power source will rise up and take its place if it does? How would the world change in response? Only time will tell. I just wanted to throw these questions into the mix since I hadn’t really noticed anyone talking about the nuclear disaster.
    Other than that, I feel that this crisis will take several years to recover from. Tourism will also take a hit. It also did not help that Japan was already doing poorly in economic terms. We will see how long it take for Japan to get back to where it was a few years ago, but in my opinion, it’s going to take a while.

  31. Japan’s economy could recover effectively; however, it will take some time. The recovery process won’t be as quick as the Kobe disaster in 1995 but there is potential for an economic boost. Other countries such as the U.S. will also be affected by this disaster because Japan is part of a major supply chain. Japan’s auto and electronics industries will take a shot since large companies such as Toyota has stopped over 45% of its production. In technology, approximately 40% of the world’s flash memory and 60% of the world’s silicon wafer production has been halted or decreased in production [1, 2]. This will hurt companies involved in these industries because of Japan’s involvement in the global supply chain. Japan’s economy will suffer greatly in the short run but in the long term will be fine. According to Mark Dampier, “you can be better off if you lose something and have to replace it”. As Japan rebuild itself it will provide an increase in GDP as new production increases. Also according to Dampier, there has been a lot of exposure for funding to Japan from organizations such as the GLG Japan CoreAplha, Invesco Perpetual Japan, and Jupiter Japan Income [3].

    Lohr, Steve. Stress Test for the Global Supply Chain. [1]

    Japan Disaster Threatens Economic Recovery, Affects Economies Globally. Huffpost Business. [2]

    Dampier, Mark. Japan’s economic recovery will be swift. [3]

  32. As Andrew Rowe already stated, the worst we will see is a situation, not a crisis. Analysis that points to Japan derailing or massively disrupting the global economic recovery is overstated for a few reasons. First, as Ben White, writer for Politico rightfully points out, there are multiple positive factors and structural conditions in our recovery that allow us to sustain the storm of the Japan crisis, including improving joblessness rates and still a friendly and attentive Federal reserve (1).

    Second, while there is solid reasoning to suggest that this crisis will affect certain markets and GDP segments, like vehicle manufacturing, these are solely minor disruptions and not permanent losses and should not be exaggerated as such, as reported by Brian Milner of the Globe and Mail and as Theresa pointed out earlier (2). There is no reason any particular market is critical to the entire economy.

    In fact, as Andrew Jones pointed out and Brian Milner also reflects upon in the article, the Kobe earthquake is precedent disproving massive prolonged impacts. Milner also points out that even if “this is bigger and more devastating” it won’t be “much longer lasting.” E if it hits harder, and even if we are weaker now than were in 1995, we’ll have time to recover because the job rate mentioned above provides us a workforce to bounce back since the economy is empirically resilient, as Milner also points out.

    Finally, despite all of the talk from minor analysts and business representatives, the person we should probably listen to most is the Federal Reserve Chairman Bernanke. In a recent statement covered by Bloomberg News he stated that what truly plays a “vital role in supporting the U.S. recovery” right now is small and mid-size banks which overwhelms the effect of other specific markets, like manufacturing which the natural disasters have effected, and to this end, Bernanke has faith that they will be overcome key challenges and are being supported by recent efforts by the Fed (3). Thus, we should not be overly concerned of their being any major damage to U.S. recovery efforts.

    1) 2011



  33. As a country, Japan will attempt to overcome multiple challenges due to the recent natural disaster (commonly known as a triple-crisis). In addition to wiping out nearly 1% of the population, the earthquake/tsunami destroyed millions of assets. The Japanese will most likely increase saving in the future; boosting interest rates. Although economists claim it is too early to predict future outcomes, they seem reluctant to support the notion that Japan will fail to recover in a timely manner. The Japanese stock exchange has declined about twelve percent in less than two weeks. Hopefully, low stock prices will attract additional investors into the market, which could accelerate Japan’s economic recovery. The Japanese government is actively inserting capital (yen) into the economy and rebuilding infrastructure using satellite images to re-create what once existed. In Naka, a 150 meter stretch of road was split during the earthquake and completely repaired in less than one week. As long as other major economies remain fairly successful, the technology based economy of Japan has a good chance of recovering quickly and possibly improving. Firms in Japan are being forced to increase efficiency and productivity. In addition, external forces (20,000 U.S. troops) are currently providing food, clothing, and shelter to the struggling portion of the Japanese population. The recovery process will undoubtedly be a struggle; however it appears that Japan is on the right path.


  34. Upon further investigation, I must consider another factor that could potentially devastate the Japanese economy if not kept under constant surveillance. On March 17, 2011, BBC reported, “The central bank (of Japan) has been injecting funds into the markets to maintain liquidity in the aftermath of last Friday’s earthquake and tsunami.” The ramifications of pumping immense quantities of yen into the economy could be tragic. With a rapid increase in the amount of yen in circulation, high inflation could follow in the upcoming months. As the increase in yen should help with imports, the injection could have negative effects on Japanese exports. The Japanese economy relies heavily on exports and every precaution must be taken to insure continued success and stability in Japanese exportation. I believe another key to Japan’s economic future will be continued prosperity in exportation and a stable inflation rate in the months to follow.

  35. Japan is a capitalist country, capitalistic countries tend to run in cycles, and generally fix them selves in time. Through a humanitarian outlook this is a tragic disaster, in the huge scope of the global economy I think this disaster which only directly effects 4% of the countries GDP, though i think that the severity of that number can be skewed due to GDP only counting finalized products. Regardless I believe they will fight through the periodic struggle, by literally rebuilding Japan. Not only will there GDP rise, but with rebuilding this part of Japan the quality of life will increase, by rebuilding with today’s top technology.
    Currently things may look terrible, especially on paper “Ten Sony plants shut down. Five Toshiba. Forty-five percent of Toyota’s production, down. Energy grid, broken. Nuclear threat, real.” This is a fresh wound and it is understandable that within two weeks of a gigantic natural disaster things are looking bleak. But recovery will most likely be quick, Japan knows that in order for there future success they need to bounce back as soon as possible, by continuing to manufacture and export.

  36. Japan’s triple crisis of the 9.0 magnitude earthquake, resulting tsunami, and damage to the nuclear reactors, has certainly caused the natives as well as importers and exporters around the world to be greatly concerned. Industrial production across Japan has suffered in a wide range of industries from electronics to three automotive companies. Included is Toyota, who expects to cut output by 40,000 vehicles. Estimates by Citi Investment Research analysts, figure the total damage to structures will be roughly $60 billion to $120 billion. This is similar to the costs from the Kobe earthquake in 1995 (Bogaisky). Economic recovery on the short-term is expected to suffer, as Japanese companies have needed to shut down production due to power shortages and damage to infrastructure. The decreasing output will potentially set the country back for the first quarter of the year (Blue). And on a longer note, Nomura predicts that if power cuts extend through April, Japan will suffer a 0.29% loss of GDP. From the insight provided, I would think that recovery will take a few years, as the global economy is trying to bounce back itself. One thing working against Japan though, is that this quake came a time when “Japan is already carrying a debt burden equivalent to about 200 per cent of its gross domestic product, the worst among industrialized countries”(Blue). The initial impact of the disaster was overwhelming, but they are doing the best they can to control the situation, especially in addressing the nuclear reactors. Questioning the future use of nuclear power as source of energy will definitely be in popular discussion in weeks and months to come. Nuclear power is not becoming less important, as the United States currently holds 104 nuclear reactors in 31 states, which produce over 20% of our country’s total electrical output (WNA). I think nuclear power has great potential, but environmentally people will be talking about it. The disaster in Japan brings light to the situation and necessity to employ safer regulations at all plants around the world and to appropriately prepare in the event of another unexpected catastrophe.

  37. Many people disagree about the time it will take for Japan to recover from these recent disasters. Personally I think that there are so many factors that will affect their economy that it is impossible to tell. In some of the above posts people brought up the potential problems the tourism market may see in future months leaving Japan even worse off. According to an article by Peter Greenberg on, “The U.S. Department of State has upgraded its travel advisory to a warning, urging Americans to defer travel to Japan.” Also, Greenberg talks about how the situation with the nuclear reactors at the Fukushima Dai-Ici plant, caused commercial and cargo airlines and cruises to change flight plans and ports. For example, Oceania Cruises announced that it is cancelling all of its calls in Japan (Greenberg). These changes demonstrate that tourism is already being affected. Also affected is business traveling. Greenberg explains that “while much of the business travel infrastructure was left intact in Tokyo and in the southern part of Japan, the ripple effect is already being felt.” All of this leads me to believe that recovery may be a very long process because there will be less money coming in from tourism and business related travel. There was a drop in the Nikkei 225 Stock Average which according to Sean Silverthrone “represents a significant loss of wealth which could lead to more deflationary pressure.” This again makes it seem as though recovery may be harder on Japan than many people predict. Although no one knows for sure how long recovery will take, one thing is for certain Japan’s economy has been significantly affected and it will continue to be affected by certain aftermaths of the earthquake, tsunami, and the crisis with Fukushima.

    Sean Silerthrone:

    Peter Greenberg:;drawer-container

  38. While this natural disaster had a horrific impact on the people and towns of northeastern Japan, it is important to note that this region of the country is located far away from the economic hub of Japan, Tokyo, and even further from the manufacturing center around western Japan. However, that is not to say that this won’t profoundly impact the Japanese economy. Two of the more serious concerns from this quake are the complications that could arise from a nuclear meltdown, and the effect it has had on several company’s manufacturing process. Nuclear energy provides about a third of Japan’s power, and the earthquake has caused a number of reactors to shut down. This could have larger implications concerning using nuclear reactors for power since future catastrophes could cause a meltdown which would have grave consequences for any economy.
    The prior major earthquake in Japan which hit the city of Kobe in 1995 was comparable to the Sendai quake we just experienced, which bodes well for predicting the impact on the economy. Kobe’s economy was roughly 4% of Japan’s GDP, similar to the Sendai area, but the impact was minimal to the point that Richard Jerram, head of Asian economics at Macquarie Research, stated that “If you looked at the macro data, you wouldn’t even know there was such a destructive earthquake in Kobe 16 years ago.”
    The second major impact mentioned was the effect on Japan’s manufacturing capacity, which would of course hinder the country’s GDP. Several large Japanese companies, such as Sony and Toyota, have cut back production for a number of important components for cars and electronics, which could impact Japan until possibly the fourth quarter.

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